Obama Admin Objects to Alaska Oil and Gas Development Bill

Published: June 16, 2011

The Obama administration today said a proposal from House Natural Resources Chairman Doc Hastings (R-Wash.) to expedite oil and gas leasing and energy infrastructure permitting in an Alaska reserve could force federal regulators to flout environmental laws and includes a costly, redundant resource assessment.

Mike Pool, deputy director of the Bureau of Land Management, also announced the agency will hold lease sales in the National Petroleum Reserve, known as NPR-A, in December 2011 and each year after, making good on the administration's mid-May promise to expedite development in the 23-million-acre reserve.

But he emphasized that his agency, which oversees 191 lease tracts covering 1.6 million acres, has all the tools it needs to facilitate development of oil in the reserve while balancing protections for wildlife habitat and subsistence users.

He said the bill's requirement to hold lease sales in the areas most likely to produce commercial oil and gas and set permitting deadlines could undermine the agency's public land management process, including the National Environmental Policy Act.

"Systematically over time we have been responsible to conduct and make available leasing in NPR-A," Pool said, adding that his agency has no pending backlog of rights of ways or other projects. "There's no delay in permitting and processing as it involves BLM responsibilities in NPR-A."

Another Interior official testified that there is no reason to reassess or update the U.S. Geological Survey's most recent assessment of oil and gas resources in the reserve, as called for by Hastings' bill. The most recent survey found about half a billion barrels of economically recoverable oil at prices near current levels.

"I think we have everything in place and we have demonstrated that over time," Pool said. "We currently have all the regulations and the authorities we need."

But Republicans on the committee and witnesses including Alaska Sen. Lisa Murkowski (R), an Alaska resources commissioner and an oil and gas industry official said Hasting's "National Petroleum Reserve Alaska Access Act" would give companies a crucial timeline for drilling and infrastructure permits if they choose to pursue leases.

"We have a permitting problem, we don't have a leasing problem," Murkowski said, pointing to the U.S. Army Corps of Engineers' decision to deny a bridge proposal by ConocoPhillips to access its lease in NPR-A. The decision was remanded late last year by the agency's Pacific Division.

The Army Corp said it is waiting to receive more information from the company on the "logistical probability of directional drilling" for a project that would involve a pipeline underneath the Colville River and a "roadless" drill site. No timeline has been set to issue a decision on the remanded permit.

"Producing oil and natural gas in the NPR-A is pointless if there's no way to get it out of there," said Hastings, fresh off a trip last week to NPR-A with Alaska Gov. Sean Parnell (R). "The real problem is the federal government's blocking and delaying of permits for necessary roads, bridges and pipelines needed to transport the energy out of the NPR-A."

A committee spokesman added after the hearing that Interior's leasing decision today suggests the Obama administration is responding to the panel's hearings. "However, if Interior paid attention to our NPR-A Access Act hearing, they would have learned that simply issuing lease sales does not solve the problem of producing oil in the NPR-A and transporting it for use," added Spencer Pederson.

Interior said it would be posting a 30-day request for nominations to industry in the coming week to help identify the potentially most productive areas to lease in the December sale.

Critics of the Hastings bill said it fails to acknowledge the poor prospects for oil development in the reserve and could imperil sensitive habitats for birds and caribou.

"We shouldn't live in a world of wishful thinking any more than hard-headed business does," said Rep. Rush Holt (D-N.J.), the ranking member on the Energy and Mineral Resources Subcommittee. "The fact is recoverable oil there hasn't become real and companies are deciding it is just not worth it."

He pointed to the three-fourths of leases in NPR-A that have been relinquished in recent years as evidence that firms are taking their investments elsewhere.

USGS last fall estimated that less than a billion barrels of conventional oil are technically recoverable in the reserve, a fraction of what is believed to exist offshore or in the Arctic National Wildlife Refuge.

But Hastings said current data for available resources is based on conservative estimates and may not reflect the reserve's true potential. His bill would require a new assessment that would include unconventional reserves, which could include coal.

Joe Balash, deputy commissioner for the Alaska Department of Natural Resources, said one company had plugged its well in NPR-A out of concerns that the permitting and development of pipelines would be too burdensome.

"The distance and regulatory gauntlet that has to be run to transport that oil resource ... is daunting," Balash said.